Utilization Restrictions on Medicare Part D Drugs Increased, Study Finds

Utilization restrictions on Medicare Part D drugs, including prior authorization and formulary restrictions, increased over time between 2011 and 2020, according to a Health Affairs study.

Pharmacy benefit managers often use prior authorization and step therapy requirements to manage medication use among beneficiaries. Although these tools are intended to control costs, avoid expensive treatments, and reduce unnecessary utilization, they have been associated with decreased use of restricted drugs. Plans may also remove drugs entirely from their formularies, leading to cost barriers for beneficiaries.

Researchers used Medicare administrative data from 2011 to 2020 to evaluate trends in the prevalence of prior authorization or step therapy and formulary exclusions in Medicare.

The number of plans, formularies, and beneficiaries in Medicare Part D all increased across the study period, rising from 33.2 million beneficiaries in 4,179 plans using 301 formularies in 2011 to 52.0 million beneficiaries in 6,160 plans using 544 formularies in 2020.

Medicare Advantage prescription drug (MA-PD) plans accounted for 80.2 percent of plans in 2020 but covered just 5,001 beneficiaries compared to 22,105 beneficiaries in standalone plans.

Utilization restrictions impacted an increasing share of compounds between 2011 and 2020. For example, in 2011, plans excluded an average of 20.4 percent of compounds from their formularies, while 11.5 percent were subjected to prior authorization or step therapy requirements. In 2020, plans excluded 30.4 percent of compounds and subjected 14.0 percent to prior authorization or step therapy.

Restrictions increased for brand-name-only and generic compounds, but exclusions and prior authorization or step therapy requirements were more common for brand-name-only drugs. Plans excluded 21.9 percent of compounds with a generic available and subjected 8.1 percent to prior authorization or step therapy in 2020. Meanwhile, plans excluded 44.7 percent of brand-name-only compounds and placed 23.7 percent under prior authorization or step therapy.

Restrictions also varied by the cost of the compound, the study found. In 2020, 16.7 percent of generic-available compounds with an average cost of $100 or less per script were excluded or subject to prior authorization, compared to 59.5 percent of compounds with an average cost above $1,000.

Among brand-name-only compounds, 15.8 percent of those costing $100 or less had restrictions, compared to 83.7 percent of compounds costing more than $1,000.

Standalone prescription drug plans had more utilization restrictions than MA-PD plans. For example, in 2020, standalone plans excluded 48.1 percent of brand-name-only compounds and subjected 23.6 percent to prior authorization or step therapy. MA-PD plans excluded 41.0 percent of compounds and placed 23.9 percent under prior authorization or step therapy restrictions.

Utilization management strategies have increased administrative burden for payers and providers and led to patient care delays. While CMS recently finalized requirements to streamline prior authorization and speed up decisions, the rule does not apply to prescription drugs.

Reducing utilization restrictions on prescription drugs would ensure beneficiaries have easy, affordable access to the medications they need to manage chronic conditions and stay healthy.